Three unexpected ways to save on your taxes

cut taxes

For some Americans, the best time of the year is the New Year when they are feeling hopeful and exhilarated about all the new challenges and successes of brand new months ahead.  Then comes what some would consider the most annoying time of the year: The stretch of time leading up to tax day, which is typically April 15.  

save on your taxes Three unexpected ways to save on your taxesThose three months between the start of the year and “tax day” seem to stretch on forever while at the same time speeding along at a rapid clip.  Without a doubt, there are forms to find and file to make sure every deduction can be justified.  The zoom comes in as April 15 looms closer and closer and the taxpayer hasn’t taken the time to pull together everything that is needed.

The best news comes from your accountant when you receive your prepared filings and learn that you have broken even, or are getting a refund.  To do this, you usually need some deductions and you might be surprised at where you can find them.

Not interested in making Uncle Sam an equal partner in your paycheck?  Look at all options and take advantage of every deduction. You might just be lucky enough to find more than you could have imagined.  Here are three unexpected ways to save on your taxes:

  1. Get the mileage tax deduction
  2. Get the energy tax credit
  3. Charitable deductions

Get the mileage tax deduction

When you drive your car for business, moving and charitable purposes, you can claim a tax deduction. Many business owners know about the tax deduction available to them for conducting business, some do not.

However, far fewer people realize that they can also take a tax deduction for miles they drive to move from one apartment or home to another and to attend medical appointments.  Also, many people do not know they can deduct mileage driven for charitable purposes.

The standard mileage rate for this deduction is set by the federal Internal Revenue Service (IRS) and is different each year.  The standard rates for 2013 were 56.5 cents per mile for business, 24 cents per mile for medical or moving purposes, and 14 cents per mile driven in service to charitable organizations.  The standard rates for 2014 are 56 cents per mile, 23.5 per mile and 14 cents per mile, respectively.  While these amounts may seem insignificant, they can quickly add up and every little bit helps. If you do not drive but ride the train for medical visits or charitable work, you can deduct the cost of your travel back and forth for these purposes.  IRS publications 334, 463, 502 and 521 provide details on what is allowable.

Get the energy tax credit

You can get the energy tax credit by making certain energy efficiency upgrades in and around your home. You can deduct hundreds of dollars for installing a qualifying biomass, wood burning stove, or fireplace in your home.  You can also receive deductions for installing insulation.  Just another way of making your home less likely to require as much energy as it did before the improvements. The government gives these deductions to reduce impacts to the environment and encourage less use of natural resources.  Some of these deductions are passed by Congress and then expire; so when you learn about the deductible upgrades, it is best to take advantage right away.

Charitable deductions

If you contribute financially to any charitable non-profit organizations, you probably already know that you can deduct the amount that you give.  However, what most people do not realize is that they can deduct the cost of their transportation to get to and from the location they are volunteering.  You can also deduct related expenses or the value of items you give to the organizations.  The IRS publication number 526 on charitable deductions gives full details of the potentially hundreds or thousands of dollars you can deduct based on your voluntary giving and service to others.

Tax Day may be dreaded but with a little planning and knowledge you can make it an easier and less financially burdensome experience.

Rip Winkle

I share my Home Decor Ideas on Let Designs.com.

Be first to comment